This is a common practice in Mexico - to have the water heater on
outside. One advantage is that the lost heat doesn't heat up the
Another is the fact that it is a warm temperate climate, and it is
warmer outside than inside, hence less heat loss.....
I can't imagine any code that would prohibit it, but I've never seen
it done in the US. Usually it is in the garage , where the temp is
close to the "outside" temp, but the ventilation is good.